Regular DAD readers will know that we cover a lot of the business aspects of the electronic dance music scene. Even though the music always comes first, developments that take place in the business realm can have far reaching effects that trickle down to even the most casual of fans and bedroom DJs. It's also fascinating to see how the rise of electronic dance music has changed the mainstream music industry and in turn has been changed by it.
It's safe to say that the Wild West/Cottage Industry days of this scene are over. Copyright claims have tightened up what you can post on SoundCloud and some producers' tracks are showing up in anything from car commercials to shampoo ads. While many facets of the electronic dance music industry have become enmeshed with the structures and systems of the greater music industry, a notable few have not leaving artists frozen out of potential revenue. One of the major ways where producers are getting shortchanged is in the realm of royalties. Sure, as I said, some of those big names might be getting some of that sweet sync royalty money for placement of their work in advertisements and films, but they're missing out on other less obvious but no less significant sources.
Think about the world you pass through on a daily basis. It's filled with music. From retail stores to public events to the dentist's waiting room, the nightclub, or the bar—there's always some type soundtrack. It's to the point where it's almost unnoticeable yet, if the music were to suddenly stop, you would notice. What you might not know is that, in most jurisdictions, artists are legally entitled to what are called "public performance" royalties for the use of their musical recordings by businesses. The reasoning behind this is that the music is a tool the business uses to create a certain ambiance that helps to entice and retain customers. It's part of their branding. In a nightclub or bar, the music could be said, in most cases, to be central to the experience. It's in this area where the relatively recent rise of electronic dance music collides with established systems and mechanisms that have failed to keep up with a rapidly changing industry.
Reading an article from Complete Music Update on how European producers are missing out on hundreds of millions of dollars in royalties brought to mind a lot of the issues surrounding royalty payments that have been on my mind for a while and I have not seen addressed properly. It all stems from this problem: royalty collecting societies (like ASCAP or PRS for Music) use radio play statistics to calculate public performance royalties.
In the past, this practice made sense: what was popular on the radio would usually be popular in the nightclubs or bars. Other than radio or recordings one purchased, there were very few ways to have access to recorded music. This all began to change with the rise of recordable media in the late 1970s/early 1980s. Being able to make your own tapes, then CDs, and now MP3s was key to the early dissemination of emerging genres of those decades like electronic dance music and hip-hop. At the same time, the advent of the Internet, which helped to uncouple music from geography and enabled streaming, has given people access to any music they want, from anywhere, at anytime. Add to that the rise of social media, where savvy artists can engineer their own public relations campaign for free, and you have a paradigm shift in the music industry.
We thus find ourselves with a royalty distribution regime designed for another age. Due to all the new ways through which people consume music, songs can become hits without any radio play at all. A perfect example is Baauer's "Harlem Shake." It was an undisputed worldwide hit. People would be forgiven for forgetting that it actually came out about a year before it became wildly popular and was an underground club hit for months. It only began to get mainstream recognition after receiving millions of YouTube plays as part of a popular meme. What this means is that for months and months "Harlem Shake" was being played in a lot of underground bars and clubs but the royalties that theses clubs were paying to collecting societies were not going to Baauer or his label Mad Decent because they were not receiving wide radio play. Later, when Baauer's track does become popular and begins to play through the airwaves because your mom wants to hear it, but it has become passé in clubs, the money paid by nightclubs and bars may end up going to Baauer or Mad Decent. My point is that there is, for the most part, no longer any relationship between the music that is actually played in bars and nightclubs and who is receiving royalties. What makes the situation more frustrating is that there is no easy solution to rectify the problem.
As the Complete Music Update article states, one of the solutions being put forward is to install a Shazam-like device in every nightclub and bar that would be able to detect the songs being played. This might sound sensible at first, but there are a number of hurdles. Firstly, one has to get permission from the owners of the businesses to install such a device. There are no provisions in the law that force an owner to accept. Secondly, this device would have to be able to actually recognize all the music that is being played in the business. I just did a test on Shazam of some tracks I regularly play out as a DJ and it recognized maybe a third of them. A lot of underground electronic music producers just don't have the means or knowledge to get their songs registered on a service like that.
With all these issues, it's frankly quite surprising no one has made any legal challenge to the right of collecting societies to seek royalties on public performance. Until a practical solution to the issue is found, the fairest thing would be that they stop collecting these royalties.
